A Meta-Analysis of SBC Contingent Valuation: Willingness to Pay Estimates, Determinants of Reliability and Replication of Split-Sample Hypothesis Tests

John C. Whitehead, Tim Haab, Lynne Lewis, Leslie Richardson and Pete Schuhmann

No 25-11, Working Papers from Department of Economics, Appalachian State University

Abstract: The single binary choice (SBC) question format, commonly used in contingent valuation studies and modeled as a hypothetical referendum, is considered incentive compatible when paired with a coercive payment vehicle and a consequential survey. Despite its dominance in the field, the SBC format yields limited information, which can result in imprecise and unreliable estimates of willingness to pay (WTP). This chapter explores the limitations of SBC using a meta-analysis dataset originally compiled by Lewis, Richardson, and Whitehead (2024) for nonparametric WTP estimation. We extend their work by analyzing parametric WTP estimates and comparing them with nonparametric Turnbull and adjusted Kristršm estimates. Our results show that parametric WTP can differ significantly from the Turnbull nonparametric estimate, and that confidence intervals derived from parametric models are often wider than those from non-paramteric WTP estimates. In a meta-regression, we find that the inefficiency of SBC decreases with data quality. We illustrate the importance of these issues with a replication of directional split-sample tests from the meta-data. Compared to parametric WTP estimates, tests using Turnbull and adjusted Kristršm estimates are more likely to detect statistically significant differences in WTP, underscoring the importance of robustness tests with alternative WTP estimates. Key Words:

Date: 2025
New Economics Papers: this item is included in nep-dcm and nep-ecm
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